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Satchu's Rich Wrap-Up
Monday 10th of September 2018

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0930-1500 KENYA TIME
Normal Board - The Whole shebang
Prompt Board Next day settlement
Expert Board All you need re an Individual stock.

The Latest Daily PodCast can be found here on the Front Page of the site

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Word of the day: "gossamer" - spider-silk, shimmering in air or on grass. Prob from "goose-summer" (Middle English)

Word of the day: "gossamer" - spider-silk, shimmering in air or on
grass. Prob from "goose-summer" (Middle English)/"go-summer" (Scots)
due to its appearance on warm, calm, summery autumn days. In Swedish
sommartråd; "summer-thread".

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Law & Politics

Sweden faces a protracted period of political uncertainty after an
election that left the two main parliamentary blocs tied but well
short of a majority, and the far-right Sweden Democrats promising to
wield “real influence” in parliament despite making more modest gains
than many had predicted.

The populist, anti-immigrant party won 17.6% of the vote, according to
preliminary official results – well up on the 12.9% it scored in 2014,
but far below the 25%-plus some polls had predicted earlier in the
summer. It looked highly likely, however, to play a significant role
as kingmaker.

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.@BarackObama reminded his audience that the current troubles "did not start with Donald Trump. He is a symptom, not the cause." @NewYorker
Law & Politics

One hazard of the trolling that the United States has been subjected
to from the White House for the past twenty months is that even the
most alarming patterns can be hard to discern, and the most prominent
dots impossible to connect. Yet a seemingly different pattern preceded
the speech that Barack Obama delivered on Friday, at the University of
Illinois at Urbana-Champaign, in which he sharply rebuked Donald Trump
and the forces that had created his Presidency. Six days ago, the
sitting President was obliquely criticized by two former Presidents
and the daughter of a deceased senator. Then, excerpts from “Fear,” a
new book by Bob Woodward, were released, highlighting the extreme
disarray in the White House and the disregard with which Trump’s aides
view him. Within a couple of days, a “senior official” in Trump’s
Administration had published an anonymous Op-Ed in the Times,
detailing the steps that he or she said that a group of officials in
that Administration have taken to rein in Trump in an attempt to avert
disaster. Meanwhile, in a move that can only be considered corporate
counter-trolling, Nike made Colin Kaepernick the face of a new ad
campaign, following Trump’s months-long tirade against Kaepernick and
the N.F.L. players who followed his lead in kneeling during the
national anthem. Viewed in this context, Obama’s acerbic condemnation
of Trump seems less like a departure from his policy of remaining
outside the political fray—though it is that—and more like the logical
culmination of a series of events displaying just how poorly Trump is
regarded in many quarters of American life.


Trump is Teflon and is going to win a.2nd Term.

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South Korea has become the first of Iran's top-three oil customers to fulfill a hard-line U.S. demand that buyers cut imports to zero. Bloomberg
Law & Politics

South Korea has become the first of Iran’s top-three oil customers to
fulfill a hard-line U.S. demand that buyers cut imports to zero.

The Asian nation didn’t import any crude from Iran last month,
compared with 194,000 barrels a day in July, tanker-tracking and
shipping data compiled by Bloomberg show. While bigger consumers China
and India have curbed buying from the OPEC producer, South Korea’s
gone one step further by halting purchases before the U.S. imposes
sanctions on the Islamic republic on Nov. 4.


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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1544
Dollar Index 95.34
Japan Yen 110.96
Swiss Franc 0.9700
Pound 1.2912
Aussie 0.7107 AUDUSD trades <0.71 lowest since february 2016
India Rupee 72.295
South Korea Won 1128.15
Brazil Real 4.0593
Egypt Pound 17.9055
South Africa Rand 15.2609

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Nowhere to Hide In Crypto as Digital Asset Ties Tighten in Slump @crypto
World Currencies

Digital coins are famously uncorrelated to other assets but they’re
highly correlated with each other. That lifted the whole market up
last year, but this year it means they’re all falling together,
leaving crypto investors with little refuge.

Correlation between Bitcoin and MVIS CryptoCompare indexes of the 10
biggest and the 100 smaller coins has picked up since the assets made
new highs between December and January. Correlation has jumped to 0.7
from lower than 0.1 at the start of the year, where 1 signals a strong
positive correlation (assets moving in the same directions), and -1
signals a strong negative correlation (asset moving in opposite

While 0.7 indicates assets are moving almost in lockstep, the level is
slightly lower than the high of 0.9 in April, as the rout in smaller
coins deepened. As a result, Bitcoin’s share of the total crypto
market has increased to 55 percent, the highest since December,
according to CoinMarketCap.

Cryptocurrencies remain uncorrelated to any other major asset. When
testing Bitcoin’s correlation against major stocks, currencies and
commodities indexes, the coefficient rarely swings above 0.5.

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27-NOV-2017 :: Bitcoin "Wow! What a Ride!" @TheStarKenya
World Currencies

Let me leave you with Hunter S.Thompson, “Life should not be a journey
to the grave with the intention of arriving safely in a pretty and
well preserved body, but rather to skid in broadside in a cloud of
smoke, thoroughly used up, totally worn out, and loudly proclaiming
“Wow! What a Ride!”

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Crypto Wipeout Deepens to $640 Billion as Ether Leads Declines @business
World Currencies

The cryptocurrency bear market plumbed a fresh 10-month low, led by a
tumble in Bitcoin’s biggest rival.
Ether slumped 8.1 percent from its level at 5 p.m. New York time on
Friday, according to Bloomberg composite pricing. Bitcoin lost 2
percent, while the market capitalization of digital assets tracked by
CoinMarketCap.com shrank to $196 billion, down about $640 billion from
its January peak.
The Bloomberg Galaxy Crypto Index of major virtual currencies has
declined for five of the past six weeks

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WTI Crude Oil via @AdamMancini4 67.99

$OIL Tried last week to break out of a bull flag from July on huge
momentum, but failed back in, and its going to need time before a
successful attempt. For now, its hit major support at $67 (middle of
flag) and looks set for a bounce with a 68.50s first target, then
~69.50 says Adam.

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The central bank has more than $400 billion in reserves at its disposal. @business
Emerging Markets

The Indian rupee has been sliding against the U.S. dollar in recent
days as emerging markets come under pressure. That’s made the currency
one of Asia’s worst performers, losing 12 percent this year.

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Previously EM and Frontier Markets had been showering in a Golden Flood of Cheap Dollar Liquidity
Emerging Markets

Previously EM and Frontier Markets had been showering in a Golden
Flood of Cheap Dollar Liquidity, had been borrowing Dollars like there
was no Tomorrow but are now scrambling to find those Dollars because
the ''Golden shower'' has been switched off.

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At a party congress, more than 98 percent of the delegates elected
Lourenco as the new chief of the MPLA, which has led oil-rich Angola
since independence from Portugal in 1975.
The former president of Angola on Saturday said he made mistakes
during his long rule but was holding his “head high” as he stepped
down as leader of the ruling MPLA party.

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Kirumira Shooting - Museveni Heckled At Crime Scene:

President Museveni arrived at the scene at about 10 minutes to
midnight, walking amidst tight security of the Special Forces Command.

The crowds that had been made silent by the army started bursting out,
one-by-one from different corners saying they are tired of tyranny and
brutal killing of high profile citizens.

"Mzee, see this? We are tired of it. We are tired of you and your men
in uniform. We want you to take action. People are getting finished,
what will you rule, an empty country?" someone in the crowd shouted.

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"The wind of change is blowing through this continent. Whether we like it or not, this growth of national consciousness is a political fact."

I refer you to Uganda. Bobi and Barbi Wine have now arrived in the US.
But what caught my attention was a video of revellers at a Tarrus
Riley concert who while chanting ‘people power’ threw bottles at
@BebeCoolUG while he was on stage performing and later ended his
performance. Inflexion points are difficult to discern but this is one
right here. A debt crisis and a political inflexion point where those
who fought for independence hand over to the ‘’born free’’ generation
is in fact a ‘’double whammy’’.

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Ethiopia PM says China will restructure railway loan @ReutersAfrica

“During our stay, we had the opportunity to enact limited
restructuring of some of our loans. In particular, the loan for the
Addis Ababa-Djibouti railway which was meant to be paid over 10 years
has now been extended to 30 years. Its maturity period has also been
extended,” Abiy told reporters in the Ethiopian capital Addis Ababa,
upon return from a summit in China.

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Botswana says China agreed to extend loan, cancel debt @ReutersAfrica

China has agreed to extend a loan to Botswana for rail and road
infrastructure as well as writing off some debt, Botswana’s President
Mokgweetsi Masisi said on Saturday.

In addition to the loan and a debt cancellation of 80 million pula,
China has also offered a 340 million pula ($31 million) grant, he

“We got a little bit more than just the loan,” he told reporters.

He did not disclose the size of the loan, but last week the ministry
of finance said Botswana was seeking a 12 billion pula ($1.09 billion)
loan for transport infrastructure.

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The Unlikely Partnership that Unlocked Congo's Crude

In 2006, Swedish billionaire Torbjorn Tornqvist was searching for new
source of crude oil.
As chief executive officer of Gunvor, a giant crude oil trader he had
co-founded with Gennady Timchenko, an ally of Russian President
Vladimir Putin, Tornqvist had reason to be concerned that the United
States’ increasingly tense relations with Russia would end up cutting
off the company’s main source of oil.
The Republic of Congo in Central Africa looked like a solution. Not to
be confused with the larger Democratic Republic of the Congo next
door, the country was poised to open the Moho-Bilondo oilfield, its
first deepwater reserve.
To get a foothold there, Tornqvist turned to local Maxime Gandzion, a
former executive at the French oil giant Total who had become a
special adviser to Congolese President Denis Sassou-Nguesso.
Using that prominent position, he paved the way for a lucrative deal
for Gunvor. Between September 2010 and June 2012, the company raked in
about US$ 2.2 billion from 22 tankers of crude it was able to purchase
from Congo. In 2011, more than 20 percent of the company’s global
profits — $327.9 million — came straight from that impoverished
tropical country.

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How South Africa's 'Ramaphoria' turned into 'Ramageddon' @guardian

Ramaphosa must tread carefully. Enemies in the ANC already hope to use
projected losses in next year’s election to justify a special party
conference that could demand a no-confidence vote. “Cyril has made
good inroads but if he goes any further he will be threatening
powerful people who he needs to keep on board for the moment,” said
Mathekga. The roots of the challenges facing Ramaphosa reach well
beyond the damage done by Zuma’s nine-year rule and right back to the
legacy of 400 years of colonialism and racism. Not only does the
president have to fight resistance within the ANC – a Zuma legacy –
but also the consequences of poor governance over two decades, and of
a deeply traumatic history.

“The irony is this guy finally gets the presidency and it’s a poisoned
chalice,” Gumede said. “Mandela’s dream is not dead because there are
people, black and white, who will fight for it, and there always will
be, but now we have to rebuild it.”

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27-AUG-2018 :: Traders might consider buying 1 Year Maturity One Touch ZAR Puts with a 17.00 strike.

I think the Rand is at risk of a precipitous, asymmetric downside move
as far as 17.00 to the Dollar. Traders might consider buying 1 Year
Maturity One Touch ZAR Puts with a 17.00 strike.

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Naija-nomics: How Nigeria has targeted @MTNza , @DStv and even @krispykreme

First, a pattern of behaviour by Nigerian authorities is emerging,
whereby the state is targeting entities in the private and public
sectors for politically expedient purposes. Although the MTN case is
the highest profile of these; these come on the back of other
instances of across both the public and private sector involving the
likes of DSTV, Krispy Kreme and Zenith Bank. Although these cases were
each different, they seem to have one thing in common – a conspicuous
political subtext.

It is very difficult to decipher the logic of the economic strategy
currently being employed by Nigeria. Some might describe it as “Penny
wise and pound foolish” whilst others may draw on a more colloquial
Nigerian expression, arguing that is simply an attempt an attempt to
“chop da money” of MTN for political purposes. An accurate description
is a cross between the two of these – neither of which have positive

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The Kwacha is likely to remain under pressure, weighed down by rising demand for dollars from importers.

Commercial banks quoted the currency of Africa’s No.2 copper producer
at 10.2800 per dollar from a close of 10.2000 a week ago.

“Looming sentiments about local budget deficits and debt distress
could be additional driving forces behind the current constrained
dollar supply, leading to the kwacha’s continued depreciation,” the
local branch of South Africa’s First National Bank (FNB) said in a

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Kenyans Fear Chinese-Backed Railway Is Another 'Lunatic Express' @nytimes

NAIROBI, Kenya — With sloping, charcoal-gray walls that resemble the
elegant curves of a luxury car, Nairobi’s sleek new railway station,
built by China, looks more like an airport terminal reserved for
wealthy Kenyans and their private jets.
Given the price tag, it might just as well be.
President Uhuru Kenyatta’s government spent $4 billion on a 300-mile
railway connecting the capital to the Indian Ocean port of Mombasa,
the most expensive infrastructure project since Kenya’s independence
54 years ago and one-fifth of its national budget.
The Kenyan government says that the railway will increase gross
domestic product by 1.5 percent, and that the loan will be paid back
in about four years. The government is also aiming to run the trains
on electricity.
The biggest surprise, Mr. Mugane said, was seeing a sculpture of Mao
Zedong at the Mombasa station. (It was actually of Zheng He, a
15th-century Chinese explorer who sailed to East Africa.) The man
putting it on a plinth was Chinese, Mr. Mugane noted. “Even that
wasn’t being done by a Kenyan,” he said ruefully.
As a result of the railway’s gargantuan cost, and the equally enormous
task of repaying China, some Kenyans already have a nickname for it:
the Lunatic Express 2.
“It’s madness,” said Samuel Nyandemo, a senior lecturer in economics
at Nairobi University, who was visibly outraged. Why, he almost
shouted, is the railway twice as expensive as a similar project in
neighboring Ethiopia or Morocco? And why was the tendering process
done behind closed doors, if not to allow Kenya’s political elite to
pocket vast sums of kickbacks?
“This is another type of lunacy,” he said.
There are parallels between the old Lunatic line and its replacement,
said Elias Randiga, the assistant director of the Railway Museum in
Nairobi, a stone’s throw from the original Nairobi Station.
Shabby and dilapidated, it had imposing lettering on one wall that
read (as if to drive the point that lower classes weren’t welcome),
“Upper Class Booking and Ticketing Office.”
“Tsavo camp remained very much a man-eater’s chophouse,” wrote Charles
Miller in “The Lunatic Express,” a book about the railway’s
construction, referring to the region that became Tsavo National Park.
Lion attacks were so bad that Indian laborers went on strike, Mr.
Randiga said. “There was a myth among Indians that they were targeted
because they ate spice and lions liked spice,” he said, taking out a
small plastic box from a drawer and presenting it. In it were
century-old claws that belonged to one of the lions, yellowed and
smooth like pieces of ivory. (“I keep them under lock and key,” he
Just as there has been local opposition to the Chinese-made railway
over land issues, the British were attacked by a tribe led by a man
who had prophesied that an “Iron Snake” would lure its people and
colonize them.

“Which turned out to be true,” said Mr. Randiga.

He proceeded to recite a poem by a British politician, Henry
Labouchere, who opposed the railway’s construction back in the early
1900s. It says, in part:

Where it is going to, nobody knows.
What is the use of it, none can conjecture.
What it will carry there’s none can define.
It is clearly nought but a lunatic line.
Mr. Randiga paused, and laughed. “We have the same debate today.”

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Living Costs or Legacy? Kenyan Fuel Tax a Dilemma for Leader
Kenyan Economy

Kenyan President Uhuru Kenyatta faces a hard decision with a new fuel
tax: approve it and boost living costs, or rescind it and risk
undermining infrastructure plans that are key to his legacy.
Introduced on Sept. 1 against parliament’s wishes and in the absence
of Kenyatta assenting to a bill that proposes postponing it for two
years, the 16 percent levy has already provoked public outrage. Fuel
traders went on strike, public-transport workers blockaded key roads
and motorists rushed to fill up at gas stations across the East
African nation.
The new tax could bring in 71 billion shillings ($705 million) a year
-- a sum the region’s biggest economy badly needs to shore up
faltering revenue collection and fund projects ranging from expanding
a high-speed railway to building a new highway from the capital,
Nairobi, to the coast. Kenyatta also has his so-called Big Four
agenda, a program to boost agriculture, manufacturing, health care and
home construction he touted after winning a second and final term in
last year’s election.
“The president has a difficult decision because the Big Four agenda,
which is his agenda, needs to be funded from somewhere,” said Jibran
Qureishi, regional economist for Stanbic Holdings Ltd. in Nairobi. If
there’s no solution, “it will be shelved and pushed forward, which
means no Big Four and no legacy.”
Stanbic warned this week the levy could drive inflation to 7.5 percent
in October, from 4 percent in August, with prices of goods expected to
increase for a minimum of six months.
The fuel tax came into effect after Kenyan lawmakers failed to factor
in enough time to vote on extending an existing exemption from the
levy until 2020 and have it included in proposed legislation known as
the Finance Bill. The tax was first legislated in 2013, but its
introduction was postponed until 2016 and then again delayed until
this year.
A High Court in western Kenya suspended the tax on Thursday, pending
the Sept. 12 hearing of a challenge to its legality brought by a youth
group. The energy regulator hadn’t adjusted prices by Friday evening,
saying it hadn’t yet been served with the court order.
Another element of the Finance Bill that Kenyatta will have to
consider is whether to back lawmakers’ proposals to maintain a
two-year-old law that caps the rate banks charge borrowers. The
measure exacerbated a slowdown in credit growth, with banks including
KCB Group Ltd. citing their inability to compensate for riskier
customers by charging higher rates for the slump.
The International Monetary Fund has said the ceiling is damaging
Kenya’s economy and insisted it be scrapped in return for new funding.
Kenya’s access to a $1.5 billion standby loan expires on Sept. 14
If Kenyatta does as lawmakers wish by exempting fuel from tax and
retaining the rate cap, it would be seen as “a complete failure by the
presidency,” according to Jacques Nel, an economist at South
Africa-based NKC African Economics. The potential loss of the IMF
facility has made investors jittery and forswearing the extra revenue
would be a further knock for the nation’s finances, he said.
While repealing the rate cap would please Treasury Secretary Henry
Rotich, making fuel exempt from tax again is a step he’s less likely
to welcome.
Revenue collection is lagging, with Kenya netting 99 billion shillings
in July, but spending 121 billion for recurrent expenditure and debt
payments. While that’s the first month of the financial year, before
tax measures take effect, if those kind of figures were projected for
the rest of the year that would mean 1.2 trillion shillings in revenue
-- 600 billion less than planned.
The government, which regularly doesn’t meet revenue targets, plans to
spend a record 2.5 trillion shillings in the 2018-19 fiscal year.
One option for Kenyatta, Nel said, is to strike a deal with parliament
by extending the tax exemption but making “some amendments” to the
interest-rate controls and asking them to back a so-called Robin Hood
tax on larger money transfers.
“I think the removal/amendment of interest-rate controls is more
important for the IMF than the fuel VAT, so this could again open the
door for a follow-up support program,” Nel said. Lawmakers have said
it’s too soon to repeal the law and Kenya’s banks remain as profitable
as they were before the ceiling was introduced.
“I don’t think Rotich will back down on the fuel tax because he has
pressure for revenue,” said Kenneth Minjire, head of securities at
Genghis Capital, a Nairobi-based investment bank.
The Robin Hood tax could partly fill the gap. Parliament has
previously rejected the Treasury’s proposal that money transfers
exceeding 500,000 shillings be taxed at 0.05 percent, with the funds
going toward the government’s universal health-care plans.
Once Kenyatta receives the Finance Bill, he’ll have 14 days to either
approve it or return it to parliament for revisions.

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VAT Tax and Spend @ThestarKenya
Kenyan Economy

A value-added tax (VAT) is a consumption tax. Value-added taxation is
based on a taxpayer's consumption rather than his income.  Advocates
say it raises government revenues without punishing success or wealth,
as income taxes do; it is also simpler and more standardized than a
traditional sales tax, and there are fewer compliance issues. It is
believed that VAT's impact would be felt less by the wealthy and
shouldered more heavily by the poor, who spend a larger percentage of
their take-home pay on necessities. Notwithstanding the above, it is a
''democratic'' Tax in that Folks are not able to game the System [This
is an important consideration especially when you consider the level
of racketeering in our Economy around the importation of basic
commodities - Sugar is a case in point] and this is one of the reasons
the likes of the IMF have been keen that the GOK introduces it.

There has been a great deal of drama around the introduction of the
16% VAT Levy on Fuel which was introduced on September 1st. MPs fought
its introduction after a ''Clouseau'' like fashion. The fuel tax came
into effect after MPs failed to factor in enough time to vote on
extending an existing exemption from the levy until 2020 and have it
included in proposed legislation known as the Finance Bill which is
why I characterised it as a ''Clouseau'' like effort.  The tax was
first legislated in 2013, but its introduction was postponed until
2016 and then again delayed until this year. President Kenyatta was
out of town. And Fuel stations went dry and queues snaked out of
Stations into the main road and counterintuitively if you were to get
home last week at a reasonable hour, you had to avoid roads with Fuel

Bloomberg's Adelaide Changole estimated that the new Tax would raise
71 billion shillings ($705 million) a year.

“The president has a difficult decision because the Big Four agenda,
which is his agenda, needs to be funded from somewhere,” said Jibran
Qureishi, regional economist for Stanbic Holdings Ltd. in Nairobi. If
there’s no solution, “it will be shelved and pushed forward, which
means no Big Four and no legacy.”

I am not certain that VAT will prove the Silver Bullet that will
finance the Big 4 because I am of the view that the GOK credit card is
now maxed out and that the introduction of VAT is actually a
neccessary defensive manoeuvre. Revenue collection is behind the
curve, with GOK collecting  99 billion shillings in July, but spending
121 billion for recurrent expenditure and debt payments. You don't
have to be a Rocket Scientist to work out that if this continues at
this pace it would mean 1.2 trillion shillings in revenue -- a
shortfall of 600b. Do the Math!

The Reality is that the Government of Kenya is simply in no position
to forgo that VAT.  If Kenyatta does as lawmakers wish by exempting
fuel from tax and retaining the rate cap, it would be seen as “a
complete failure by the presidency,” according to Jacques Nel, an
economist at South Africa-based NKC African Economics. The potential
loss of the IMF facility has made investors jittery and forswearing
the extra revenue would be a further knock for the nation’s finances,
he said. [Bloomberg]

The Bigger challenge is this. Clearly the VAT imposition is going to
ripple through the economy, dial up inflation and dial down consumer
spending power. GDP growth is surely going to lose momentum and given
the reaction we have witnessed, its becoming increasingly clear we are
testing the limits of the ''Laffer Curve''

The Laffer Curve suggests that, as taxes increase from low levels, tax
revenue collected by the government also increases. It also shows that
tax rates increasing after a certain point (T* on the diagram below)
would cause people not to work as hard or not at all, thereby reducing
tax revenue. Eventually, if tax rates reached 100 percent, shown as
the far right on his curve, all people would choose not to work
because everything they earned would go to the government.

Denis Healey the British Chancellor of yore famously announced ''I
want to squeeze the rich until the pips squeak.” Remove the word
''rich'' insert the word. ''Kenyans'' and what we witnessed were
Kenyans ''squeaking'' That loops me back to the following issue, at
some ''Tax and Spend'' runs out of road. Therefore, we really need
some refreshed and innovative thinking. I and many others were for
example very alarmed at the ''Robin Hood'' Tax. Let me tell you why.
If you are dependent on funding your deficit via the wholesale capital
markets, then you do not penalise Investors [by up to an addition 15
basis points - reference unto 3 movements] to buy GOK bonds for
example. Thats the equivalent of pulling out a loaded Pistol and
insisting on shooting yourself in the Foot. Not a good idea I am sure
you will agree but that is what the Robin Hood Tax is.

We need to starting ''Think[ing] different'' to borrow the iconic
Apple Advert from 1997 and fast but make no mistake a reversal of the
VAT on Petroleum is simply not possible.

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Beijing frustrated as another Chinese journalist detained in Kenya @SCMPNews
Kenyan Economy

Police entered the Nairobi offices of China Daily newspaper and
demanded to see staff documents before hauling deputy bureau chief Liu
Hongjie to the police station. This was despite verifying his work
permit online.
“His work permit is valid. They even checked it online at his office.
But he was still taken away,” said embassy spokesman Zhang Ghang,
adding the journalist was later released.
On Wednesday Kenyan police carried out a similar raid on the African
headquarters of China Global Television Network (CGTN), briefly
detaining eight journalists as well as five other nationals employed
in the same building.
The Chinese embassy expressed concern at the increase in detentions of
its nationals even though they hold legal documents.
Government spokesman Erick Kiraithe said the raid on CGTN was a
“mistake”, without elaborating.
China financed 90 per cent of a US$3.2 billion railway linking Nairobi
to the coastal city of Mombasa.
President Uhuru Kenyatta attended a two-day China-Africa forum in
Beijing this week to discuss the financing of the railway’s second
phase linking the Rift Valley town of Naivasha to Kisumu near the
Ugandan border, at a cost of a further $3.5 billion.

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Guess we can slot Kenya into the independent FP group, at least until Xi decides to fund that big railway extension. Kenyan prez headed to UK/US
Kenyan Economy

This was despite verifying his work permit online." guess we can slot
Kenya into the independent FP group, at least until Xi decides to fund
that big railway extension.  Kenyan prez headed to UK/US

yields on the 10-year and 30-year Eurobonds increased by 0.2% points
and 0.3% points to 8.1% and 9.1% from 7.9% and 8.8% the previous week,
respectively. @CytonnInvest http://bit.ly/2oQGMzA

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The Kenya Shilling has appreciated by 2.4% year to date @CytonnInvest
Kenyan Economy

The narrowing of the current account deficit to 5.8% in the 12-months
to June 2018, from 6.3% in March 2018, attributed to improved
agriculture exports, and lower capital goods imports following the
completion of Phase I of the Standard Gauge Railway (SGR) project,
Stronger inflows from principal exports, which include coffee, tea,
and horticulture, which increased by 10.8% during the month of May to
Kshs 24.3 bn from Kshs 21.9 bn in April, with the exports from coffee,
tea and horticulture improving by 11.0%, 19.1% and 2.0% m/m,
Improving diaspora remittances, which increased by 71.9% y/y to USD
266.2 mn in June 2018 from USD 154.9 mn in June 2017 and by 4.9% m/m,
from USD 253.7 mn in May 2018, with the largest contributor being
North America at USD 130.1 mn attributed to; (a) recovery of the
global economy, (b) increased uptake of financial products by the
diaspora due to financial services firms, particularly banks,
targeting the diaspora, and (c) new partnerships between international
money remittance providers and local commercial banks making the
process more convenient, and,
High forex reserves, currently at USD 5.7 bn (equivalent to 8.6 months
of import cover).

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For the last 12 months (LTM), NASI, NSE 20 and NSE 25 have declined by 3.0%, 23.5% & 7.2%, @CytonnInvest
Kenyan Economy

During the week, the @NSE_PLC was on a downward trend with NASI, NSE
20 and NSE 25 declining by 2.3%, 3.2% and 2.7%, respectively. For the
last 12 months (LTM), NASI, NSE 20 and NSE 25 have declined by 3.0%,
23.5% & 7.2%,

The market is currently trading at a price to earnings ratio (P/E) of
13.2x, which is 2.5% below the historical average of 13.5x, and a
dividend yield of 4.4%, higher than the historical average of 3.7%.

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EABL breaches Sh11bn corporate bond terms @BD_Africa
Kenyan Economy

East African Breweries Limited (EABL)   has breached the terms
attached to a Sh11 billion corporate bond, prompting the Nairobi
Securities Exchange-listed firm to get a waiver of the conditions from
the Capital Markets Authority (CMA).
The brewer is required to maintain a current ratio — a measure of a
company’s ability to meet its short term obligations — of at least 1.
This means that its current assets including cash balances should at
least match short term liabilities such as bank overdrafts and
supplier debt.
The brewer, while noting that it has net current liabilities of Sh4.2
billion, says this is likely to change as it seeks to reduce short
term debt in favour of longer-term borrowings.
“As directors, we are satisfied that this is transient in nature as
the group continues to align its capital expenditure with long term
funding,” the company said.
EABL was the latest to raise funds from a bond in April last year in a
market where other issuers have defaulted or restructured their
obligations, causing major losses for bondholders whose claims were
ARM Cement , Nakumatt Holdings, Chase Bank and Imperial Bank are some
of the borrowers that have defaulted on their bonds and commercial
Investors in the instruments have traditionally asked for above-market
interest rates as compensation for lack of collateral and looser

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EABL share price data here
Kenyan Economy

Par Value:                  2/-
Closing Price:           195.00
Total Shares Issued:          790774356.00
Market Capitalization:        154,200,999,420
EPS:             7.19
PE:                 27.121

FY Revenues of KES 73.5bn
FY Profit Before Tax 11.7b versus 13.3b -12.00%
FY Profit After Tax 7.3b versus 8.5b -15.00%
FY EPS 7.19 versus 9.71 -26.00%
Final Dividend 5.50

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Every Listed Share can be interrogated here
Kenyan Economy

Yields on the 91-day, 182-day and 364-day papers declined by 0.1%
points to 7.6%, 8.9% and 9.8%, respectively, from 7.7%, 9.0% and 9.9%
recorded the previous week @CytonnInvest http://bit.ly/2oQGMzA

Total Assets Under Management (“AUM”) held by Unit Trust Fund Managers
grew by 0.3%, to Kshs 55.2 bn in H1’2018 from Kshs 55.1 bn recorded in
H1’2017 @CytonnInvest http://bit.ly/2oQGMzA

The AUM for Money Market Funds grew by 2.1% to Kshs 44.5 bn in H1’2018
from Kshs 43.6 bn recorded in H1’2017;
CIC Asset Managers recorded the strongest growth in AUM of 21.4%, to
Kshs 15.8 bn in H1’2018 from Kshs 13.0 bn in H1’2017,
Sanlam Investments declined the most by 34.6% to Kshs 2.0 bn in
H1’2018 from Kshs 3.0 bn in H1’2017,
CIC Asset Managers remains the largest overall Unit Trust Fund Manager
with a market share at 28.7% in H1’2018, up from 23.7% in H1’2017,
Highest yielding money market fund as of September 6th was Seriani
Money Market Fund, yielding 11.62%.

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by Aly Khan Satchu (www.rich.co.ke)
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September 2018

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